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Home > Coronavirus > A spring unlike any other: Ground rules for reopening

A spring unlike any other: Ground rules for reopening

Jun. 19, 2020 by Joseph Brusuelas

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Thirty states have coronavirus reproduction rates of greater than one (R>1), meaning that each infected person is expected to spread the virus to more than one other person. This implies that the timing of reopening the economy may have been premature and the rules framing that reopening may have involved too much risk, as the first wave of the pandemic has yet to reach its apex. Of large states, only New York and New Jersey have reproduction rates at pandemic lows.

Since the ground rules for reopening the economy were laid out weeks and months ago, there is no political appetite for another round of shelter-in-place orders despite public misgivings about an early reopening. Relaxing restrictions on social interaction on a trial-and-error basis as the spread of the virus again accelerates does denote some economic risks to what is expected to be a third quarter rebound in the domestic economy.

While infections diminishing to a level suggesting an imminent all-clear signal of course would be welcome, the difficulties in mitigating the disease imply that may not be in the cards for now. However, if infections continue increasing, it would create the conditions for a summer debate full of sound and fury over whether Americans should again retreat to their abodes for an indeterminate period of time. Given that the simple choice to wear a mask – something supported by straightforward science – has been politicized, a full-throated debate over another round of shutdowns is likely in no one’s best interest. What is needed is more science and fewer hot takes on the evolution of the disease.

Ideas around restricting interactions for persons with immune-system issues and older people less able to withstand diminished respiratory capacity have unfortunately not been prioritized. These restrictions would allow younger people to return to work and life, while the older among us remain at home.

Ground rules around reopening also require personal responsibility on the part of those who have returned to somewhat normal life, with the understanding that the virus is everywhere, that there is no prior immunity, and that it is up to each of us not to catch it or to spread it. This can only be done by wearing masks and maintaining social distancing outside of the home.

The first figure below shows that in some areas of the country it may be time to reconsider the pace and intensity of reopenings. Since Memorial Day weekend, newly reported cases of the coronavirus have moved from 21,500 to 24,000 cases per day on a national basis. The second figure shows infections are likely to approach 2.5 million cases by the end of June. That implies deaths associated with COVID-19 approaching 133,000, assuming the current (and slowly decelerating) mortality rate of 5.4%. (Note: because the rate of infections is no longer exponential on a national scale, we have assumed a straight line increase in cases and deaths.)

We attribute the national increase in infections to those states that are not home to the metropolitan areas that were hard hit initially. As we show in the first figure below, though it took a while for travelers to spread the disease away from states with major metropolitan areas (Boston, New York/New Jersey, Philadelphia, Chicago and Los Angeles), the spread of the disease in the non-metropolitan states is not unexpectedly gaining momentum. Thus, we are not entering a second wave. Rather it is more likely the tail end of the first wave with a second wave for all yet to come in late fall and winter.

And while authorities in the states with major metropolitan populations (shown in the second figure) took steps to control the outbreak – all with the acquiescence of the public – there was for various reasons an initial reluctance not to close the economies of some states and then a rush to reopen even where cases were still rising. We show this in the third figure below.

Recently, Michigan and Vermont (which has very few cases) took steps to extend stay-at-home orders through mid-July in response to local outbreaks. Governors have no reason to put their communities at risk. We can reconfigure the way we live and work, and we can rebuild the economy, but not when the virus continues to attack the population.

State-by-state analysis

The table below shows that daily reported COVID-19 cases in Arizona have seen a 30% average weekly growth rate in the weeks since April 30 as local economies have reopened. The average weekly growth rate for cases in North Carolina since April 30 is 14%, which prompted the governor to prohibit the Republican convention in his state. Cases shot up by 22% in Florida, where the convention will be held in August. Oklahoma’s average weekly growth rate for cases is up 16%.  At the other end of the spectrum, cases in Massachusetts have seen a decline of 27%, and New Jersey and New York have each had declines of 26%.

A general disconnect

California

A few states deserve some notice. The first is California, where coronavirus cases have been climbing since the end of March to record high levels.

California is our most populous state and accounts for 14% of all newly reported cases. Only now has California’s health department begun requiring citizens to wear masks.

Nebraska

In Nebraska, the governor has said he would withhold federal relief money from counties that require masks in government buildings. That contradicts the better judgement of the University of Nebraska Medical Center College of Public Health Dean Ali Khan. In a June 17 interview with KETV Omaha, Khan said: “I would say that we have relatively uncontrolled transmission here in the state of Nebraska.”

Though cases in Nebraska are low (certainly relative to California), the figure below hints at a resurgence in the latest 10 days.

Florida

Florida’s governor rushed to reopen his state, which depends on tourism and is also home to countless retirees. The figure below shows cases rising after Memorial Day, with the northern snow birds being replaced by southern vacationers on reopened beaches. Florida’s hospital intensive care units are at 75% of adult capacity, as reported by the Florida Agency for Health Care Administration.

Oklahoma

The ultimate irony could perhaps be Oklahoma. President Trump’s kick-off campaign rally in Tulsa has been rescheduled in deference to Juneteenth and the Black Lives Matter movement. But holding a rally in an indoor arena is in disregard to the well-being of his supporters. Recall that the epidemic in South Korea was traced back to a megachurch, while the spread in Washington state was traced to a single traveler.

The figure below shows that coronavirus cases in Oklahoma have taken off since Memorial Day. Despite the proclamations from Oklahoma Sen. James Lankford that few hospitalizations or deaths have resulted from that increase, the potential for community spread increases within an indoor arena and will be a function of the number of persons in attendance.

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Filed Under: Coronavirus, Economics Tagged With: coronavirus, Covid-19, fitted curve, middle market

About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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